Australian students from a wealthy background show a difference of about two-and-a-half years of schooling compared to a student from the lowest socio-economic group.

Questionnaire responses have also found girls hold a much more negative view about maths.

"Australia has slipped backwards to the type of gender disparity that was seen decades ago, and the performance scores of girls coupled with a number of particularly negative motivational attitudes puts Australia further away from providing all students with the same educational opportunities," Dr Thomson said.

Indigenous students are on average performing significantly worse than non-Indigenous students, a difference of about two-and-a-half years of schooling or more in maths, science and reading.

Ms Thomson also raised concerns that more than two-fifths of students failed to reach base proficiency levels in maths.

"These are the levels at which the Ministerial Council set as not really ambitious goals but achievable goals for a country such as Australia and for a large proportion of students not to be achieving those results is quite a worry," she said.

Twelve other countries also showed declines in maths literacy over 10 years, with the largest decline occurring in Sweden, then Finland, New Zealand, Iceland then Australia.

"They are demonstrably worse than anything that ever occurred under the Coalition government. They are a serious wake up call for the Australian education system."

He says the report's findings vindicate the Coalition's plan to focus on teacher quality.

Prime Minister Tony Abbott says the Government has fixed the school funding issue and school standards are the key to lifting rankings.

"We've got the funding sorted out. We need to have a debate about better school performance, about more principal autonomy, about more parental involvement, about more community engagement and above all else, about higher standards and that can now happen," he said.

"We have always conceded that the system has been broken, that the old Howard-style system is broken, which is why the Labor government went through the biggest reform of our school system in 40 years and why the Abbott Government now cannot afford to toss it aside."

Kevin Donnelly from the Education Standards Institute says he is not surprised by the results.

"We have in fact been in trouble, if you like, for many, many years.

"We have trouble with disruptive classrooms...[and] we don't allow our teachers to mentor one another and to help one another. In places like Singapore, they actually respect teachers, children respect teachers, they are well-resourced.

"They have a lot more time to learn from one another and to improve classroom practice."

He says the debate is not only about funding.

"Money is important, but it gets back to a rigorous curriculum, effective teaching practice, good teacher training - so there are a few things we can look at there."

Results back push for needs-based funding model: Greens

The Greens say Australia's results in the report should put more pressure on the Government to adopt a needs-based school funding model.

"It's not just the quantity of money handed out to the states, it's the way that money is spent," Senator Wright said in a statement.

"If that money doesn't get to the most disadvantaged students, Australia will continue to decline on an international scale."

The Australian Education Union says the widening gaps vindicate the predictions of the Gonski review.

"This must be a wake-up call to the Abbott Government," deputy federal president Correna Haythorpe said in a statement.

"They have consistently refused to embrace the Gonski recommendations for more equitable funding arrangements.

"Amid the constant backflips and chaos, it remains impossible to determine whether they even care about the inequity in education and the social and economic cost of it.

"The Government must make a full six-year commitment to the more equitable funding arrangements contained in the Gonski law and agreements if schools are to be given the resources and time required to lift achievement levels and break the connection between disadvantage and poor outcomes."